Renter demand expected to outpace supply in 2025, with Class A, Class B and affordable housing attracting the most investor interest
New York, NY – February 18, 2025 – Berkadia’s 2025 Multifamily Powerhouse Poll Outlook finds that commercial real estate experts expect increased multifamily transaction activity in 2025, driven by an improving economic outlook, with national apartment occupancy stabilizing and absorption outpacing deliveries. Robust rental demand and favorable market conditions position multifamily investments for strong performance in the years ahead, according to Berkadia’s investment sales advisors and mortgage bankers.
Berkadia’s survey finds that a majority of respondents expect renter demand to exceed apartment supply in 2025 (59%). Class A and Class B rental housing and affordable housing properties are anticipated to attract the most investor interest.
While 47% of respondents believe that inflation will continue to have a moderate-to-significant impact on commercial real estate investment activity, the majority expect transaction activity to increase under the Trump Administration.
“Despite ongoing challenges like inflationary pressures, high interest rates, and rising distressed opportunities, investors continue to recognize significant opportunities in the multifamily sector,” said Berkadia Executive Vice President and Head of Production Ernie Katai. “Although market fundamentals are expected to remain soft through 2025 with new supply coming online, the core drivers of rental housing remain solid, and investor confidence in the sector remains high.”
The eighth-annual proprietary poll, conducted in December 2024, collected insights from 320 Berkadia investment sales advisors and mortgage bankers to assess the near and long-term outlook for multifamily investment and the broader capital markets landscape. To learn more about the survey’s findings, review Berkadia’s robust Multifamily Powerhouse Poll Outlook report, here.
Additional highlights include:
Private investors to drive transaction activities: 55% of respondents believe that private investors will drive the most transaction activity this year. Institutional investors are anticipated to follow, while private non-traded REITS, public REITS, and cross-border investors are expected to be less active by comparison.
GSEs to be the most active lenders: 75% of respondents believe Fannie Mae and Freddie Mac will be the most active lending sources in the multifamily sector this year, followed by private funds/debt funds and banks.
Cap rates to hold steady: 71% of respondents expect today’s cap rates to hold steady through the end of the year. Investors are primarily underwriting exit cap rates 25-50 basis points higher than their going-in cap rates, though a significant number are keeping them the same.
Anticipated increase in distressed opportunities: A large majority of respondents (81%) also anticipate an increase in distressed opportunities during the year.
Investors to find affordable housing opportunities increasingly attractive: Over the next one to two years, investors are expected to find existing affordable housing property acquisitions the most attractive opportunity for investors, followed by rehabilitations of existing affordable housing properties. Respondents also shed light on addressing the Affordable Housing Crisis, with 22% believing that modifying tax policy will be the most effective solution while 21% say that local and state government intervention is the most effective.
Institutional investors are focused on core and core-plus opportunities: Berkadia respondents expect core (22%) and core-plus (21%) opportunities to be most attractive for institutional investors, with moderate interest in joint ventures, preferred equity recapitalizations and value-add opportunities.
Generative AI continues to play a role in CRE: Experts say that generative AI is primarily being used for market trend analysis (26%), financial modeling (17%) and investment opportunity screening (15%).
About the 2025 Multifamily Powerhouse Poll Outlook
The 2025 Multifamily Powerhouse Poll Outlook data was collected in an online survey, facilitated by Berkadia through Microsoft Forms in December of 2024, to assess anticipated commercial real estate (CRE) activity and opportunities for the year ahead. The sample was based among Berkadia’s 70+ offices throughout the United States, comprising of 112 investment sales advisors and 208 mortgage bankers, totaling 320 overall respondents.
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